Expert: Jan Leasure - 9/30/2009

Question
We would like to find a company that markets Shared-Ownerships for a project that we own. Are there companies that we can hire to SELL these shares for us nationally? We are in a Mountain Area close to Yellowstone, several ski areas.

Answer
Hi, Tom,

A quick search of the internet reveals that there are some companies that profess to sell fractional interests in vacation homes.  Because the fractional ownership business has mostly disappeared from the real estate scene, I would want to see some hard evidence of what a company has done in the last six months.

Fractional ownership appeared in the early part of this decade, when real estate prices were escalating rapidly.  One segment of the real estate market that flourished during this time was the second-home/vacation home market.  It became very trendy to own a second home, and lots of people wanted to "keep up with the Joneses."  One of the ways people could afford to own a second home in a very expensive area was to purchase a fractional interest.   

While I don't have statistics on how many people actually bought a fractional ownership, I am very sure that it is a much smaller number than the number of shares offered for sale.  I watched the fractional ownership market in Hawaii for several years, and I observed those offerings languishing on the market for months, even during the time of brisk sales.  I also observed sellers in California attempt fractional sales without success.

So whether you use a national/international sales company or a local real estate broker to sell your fractional interests, I would ask some tough questions prior to listing my property with them.  As indicated above, ask how many fractional interests they have sold in the last six months and in the last year.  Ask how long they have been in the fractional interest sales business.  How many transactions have they closed in that time?  And one of the most important questions of all:  Have you or any of the sellers you represent been sued by a buyer?  If so, over what?  This is very important, as most sellers of common interest developments will be sued by one or more buyers at some point.  So be certain, as you proceed, that you have a good attorney to look over the shoulder of you and your representative through the process.

Good luck!